House Acts To Allow I.R.S. Fees

By ROBERT D. HERSHEY Jr.,

Published: September 28, 1994

WASHINGTON, Sept. 27—
In a move likely to make taxes more taxing for millions of Americans, the House today approved a bill allowing the Internal Revenue Service to collect up to $119 million in user fees that the agency would have a bureaucratic incentive to impose. Passage within days by the Senate is considered a formality.

Within months, the I.R.S. expects to impose new levies on individuals and businesses, which it can keep rather than turn over to the Treasury.

An I.R.S. spokesman, Frank Keith, said, however, that it did not intend to apply these still-undetermined charges to such common agency services as supplying forms or offering advice over the telephone.

"The fees we will be implementing will not be mission-related," Mr. Keith said. The I.R.S., he explained, would charge taxpayers only when they demanded "special services."

But even if the agency, which is pressed for money to process returns and modernize its computers, resists the biggest targets, more than 13 million taxpayers are likely to be affected by charges for two items alone next year.

About 11 million who file electronic returns would pay for the I.R.S. to certify that a refund was not subject to a charge for unpaid debt, thus enabling a taxpayer to seek a loan against the refund. A further 2.5 million would be charged to obtain permission from the I.R.S. to pay the tax they owe by installments.

These have been regarded as likely sources of extra money since the Clinton Administration proposed last winter, in its 1995 fiscal year budget, that the I.R.S. be authorized to collect $8 for refund certification and $18 for installment deals.

User fees have become increasingly popular since the early years of President Ronald Reagan's Administration, but in most cases agencies collecting them, like the Securities and Exchange Commission, have been required to turn the money over to the Treasury as general revenue. The appropriations bill passed by the House today, in contrast, allows the I.R.S. to keep as much as $119 million for itself.

"This fall, absolutely," an agency official said, when asked how soon the I.R.S. would be seeking public comment on a list of fees it is thought to have in advanced stages of preparation. Perhaps 75 percent of the money to be raised is said to have been designated for processing returns.

Though part of the Clinton budget plan, the matter of user fees for the I.R.S. has attracted little attention and less opposition.

Last week, however, Representative Ernest Jim Istook, Republican of Oklahoma, who had sought to remove such fees entirely from a broad appropriations bill, won a reduction to $119 million from an initial $147 million.

The bill requires that the fees be set no higher than the cost of providing the service, officials noted, implying that the $8 refund certification and the $18 installment permission proposed last winter may be reduced.

One fee the I.R.S. already collects, for providing copies of returns filed in previous years, is already scheduled to rise. Effective Oct. 1, the charge for back copies will be increased to $14 from $4.25.

The I.R.S. also currently collects fees for some other services -- such as issuing so-called private letter rulings, in which it expresses a view of specific transactions, and for determining that a company pension plan meets the requirements for tax-exempt status.

These are thought to be among the candidates for the additional money-raising authorized today, which under the legislation will be reviewed by the General Accounting Office.